Will ‘cyborg’ investing be the just-right combination for investors?

Are you trying to decide between using a “robo” adviser and an actual human adviser to help you invest your money? You may not have to anymore.

Financial firms and technology companies are working to deliver a mixed offering for clients -- that combines online automated investing platforms with advisers in a call center or brick-and-mortar offices.

Personal Capital, a hybrid robo launched in 2011, reached the $3 billion in assets milestone earlier this month. Financial Engines
FNGN, +0.27%
one of the original robo advisers that manages employer-sponsored retirement accounts and had $125.3 billion in managed assets at the end of the second quarter, last year acquired The Mutual Fund Store, a brick-and-mortar advisory firm, in an attempt to add a human presence to its technology.

“The rise of the hybrid makes a lot of sense,” said James McGovern, vice president of consulting services at research and consulting firm Corporate Insight. “While people find the low-cost model appealing, there is that interest in having someone to talk to and the element of hand-holding and planning.”

Financial institutions have become aware of this. Vanguard Group, one of the largest investment firms in the country, made a splash last year with its hybrid platform, Personal Advisor Services, which pairs the automated investment service with a call center for individuals to speak with a team of advisers. It had come out of its pilot program with $17 billion in assets, $10 billion of which had been transferred from the company’s existing client assets. The service now manages $41 billion.

“It is the golden combination,” said Bill Harris, chief executive officer of Personal Capital, which jumped to $3 billion in assets under management from $2 billion six months ago. It hit the $1 billion mark in January 2015.

But not everyone wants a person to work with - and there are plenty of retail robo advisers that have popped up as a result of the growing trend. Of course, humans are behind the scenes coding the software and making decisions. Betterment, one of the leading retail robo advisers, for example, caused a stir in June when it decided on behalf of its clients, and the advisers it works with on a separate platform, that it would halt trading for a few hours to shield its customer base from market volatility related to the Brexit vote. For the most part, however, consumers use it as a set-it-and-forget-it service for long-term financial goals.

These types of platforms are also growing in assets and popularity, though slower than their established counterparts. Betterment has more than $5 billion in managed assets across its retail, adviser and 401(k) channels. Wealthfront, another popular robo adviser startup, passed $4 billion in August.

Ultimately, it’s up to customer preference.

“It comes down to how comfortable are you trusting technology rather than needing that human support?” McGovern said. “Are you comfortable with an algorithm managing your money or do you need someone on the other end?”

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When Financial Engines bought The Mutual Fund Store, it came with more than 120 storefronts, all of which are in the process of being rebranded with Financial Engines’ name by the end of October and will allow people to walk in and talk about their accounts. The move, which cost the company $560 million, was a signal to the rest of the wealth-management industry that some tasks can’t be left to do-it-yourself technology.

“Your life evolves,” said Lawrence Raffone, CEO of Financial Engines. “There’s always a point in time when you need a little advice.”

The wealth management industry as a whole has been caught in a frenzy the past few years, trying to find the best way to attract clients. And robo advisers, which began gaining popularity when Betterment and Wealthfront came on the scene in 2008, are the cause of it. Since then, major financial players, such as BlackRock
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and Invesco
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, have acquired robo adviser platforms to partner with other large financial institutions that provide the technology to their advisers. Well-known banks, like Wells Fargo
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and Bank of America
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, have said they are coming out with their own hybrid versions. Independent advisers are using this software as well.

“The hybrid option has a lot of momentum,” McGovern said. “It just reflects what people want, which is someone to be there to bounce questions off of during the tough times.”

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